What Will Drive Dunkin’ Brands’ 2Q17 Earnings?
In 2Q17, analysts expect Dunkin’ Brands (DNKN) to post EPS (earnings per share) of $0.62, which represents a rise of 8.8% from its EPS of $0.57 in 2Q16.
This EPS growth is expected to be driven by Dunkin’s revenue growth, expansion in its EBIT (earnings before interest and tax) margin, and its lower effective tax rate.
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Analysts expect the company’s effective tax rate to be 38.3%, compared to 38.9% in 2Q16. In the graph above, we can see that the company has outperformed analysts’ estimates in each of the last five quarters. When this happens, a company’s stock price tends to rise.
For the next four quarters, analysts expect Dunkin’ Brands to post EPS of $2.43, which represents a rise of 3.4% compared to the corresponding quarters of the previous year. For 2017, the company’s management has set its EPS guidance in the range of $2.40–$2.43, which represents a rise in the range of 6.7%–8.9%.
In 1Q17, Dunkin’ Brands paid total dividends of $0.32 at a dividend yield of 2.4% and a payout ratio of 53.1%. For the next three quarters, analysts expect the company to pay dividends of $0.97 to take the total for 2017 to $1.29, which represents a rise of 7.5% from $1.20 in 2016.
Next, we’ll look at Dunkin’ Brands’ valuation multiple.